F.L.O.P. Analysis – Why Most New Products Fail In The Market

Alberto Savoia | September 9, 2014

The following guest post is the second in a series of four articles by innovation agitator Alberto Savoia (find the first here). Throughout his career as a serial entrepreneur and Google employee, Alberto has experienced great market successes–along with a few inevitable failures. In this series he’ll share his knowledge about why products fail and provide recommendations for beating the odds. Download Alberto’s ebook about overcoming market failure.

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In my previous article I introduced The Law of Market Failure which states: “Most new products will fail in the market, even if they are competently executed.”

A tough way to start. But now that we know the odds, we can develop a plan to beat them. After all, implicit in The Law of Market Failure is The Law of Market Success: “Some new products will succeed in the market.” Let’s see how we can maximize our chances to develop one of those successful products.

The Law of Market Failure gives us the rough odds (rough in more ways than one) for market failure and success. But what are the causes that account for so many failures and so few successes? What do new products that fail in the market have in common?

Between 2009 and 2011, while at Google, I became a student of market failure. It was a great environment for doing that. I had access to hundreds of colleagues who, prior to Google, had worked in various capacities (product management, R&D, marketing, etc.) for hundreds of companies and in dozens of markets: from startups to Fortune 500s; from disposable consumer goods to multi-million dollar B2B hardware and software. My colleagues were not only willing, but often eager, to share their war stories. In fact, many of these discussions reminded me of the scene from the movie Jaws where the characters played by Robert Shaw and Richard Dreyfuss brag about their shark attack stories–and take pride in showing off their battle scars.

It did not take long before a pattern emerged from these stories: Most new product failures could be attributed to one or more of three main causes: Failure in Launch, Operations or Premise. Which, incidentally, makes for a convenient and appropriate mnemonic: F.L.O.P.

Let’s look at a typical scenario for each of these causes in isolation. In other words, for illustrative purposes, let’s assume that the team got two out of three things right in the Launch, Operations or Premise trio. If you’ve been around long enough some, or all, of these scenarios may sound very familiar.

Failure In Launch

In this scenario we have new products that were well thought-out, clearly met a market need, had the right set of features and were properly designed, engineered and manufactured. However, during the “launch” (i.e. the concerted marketing, PR and social-media efforts) something went wrong. People either didn’t take notice, or the timing, pricing or positioning was such that there was no product traction and no buzz. The new products either failed to achieve the necessary market awareness, or disappeared from it as quickly as they came into it.

Failure in Operations

In this case, we have new products that, as before, were well thought-out, clearly met a market need and had the right set of features. On top of that, the launch was also successful and generated a lot of interest. As a result, there was strong initial traction for these new products and all signs pointed to success. However, after a short time, various operational problems (reliability, usability, performance, etc.) began to manifest themselves. Early adopters brought the quality of these products into question, a few bad reviews appeared online and in the press and, before you knew it, failure was cruelly snatched from the jaws of victory.

Failure in Premise

In this final scenario, the products were well built (solid, reliable, stable) and the teams responsible for the launch did a great job; there was a lot of buzz and, sometimes, even strong initial sales and adoption. But after a short while, even though the product did exactly what it was designed to do–and did it well–people realized that they didn’t really need it or want it after all. The people who had already bought it stopped using it, and those who were thinking of buying it changed their mind and went after the next new shiny thing.

These three scenarios can be further summarized as follows:

Failure in Launch: We built the right product. We built it right. But we launched it wrong.

Failure in Operations: We built the right product. We launched it right. But we built it wrong.

Failure in Premise: We built the wrong product to start with.

When we look at it this way, one thing should become clear: Scenarios 1 and 2 can be remedied–and they probably should. It may not be easy, quick or cheap, but the very same product can be relaunched or re-engineered.

Scenario 3, on the other hand, is pretty much a dead-end. If the launch was successful (i.e., enough people heard about the product, bought it/tried and used it) and the product worked well (i.e., people did not stop using it due to quality or performance issues) the most likely conclusion is that we built the wrong product.

When I reviewed my collection of failure stories in the context of these three categories, another thing became clear: Scenario 3 was not only the hardest one from which to recover and regroup; it was also most the common–by far! The message for new products was loud and clear:

“Make sure you are building The Right It before you build It right.”

Those words have become my mantra whenever I contemplate some new product or venture; and they should become yours as well.

The next question is: How do we know if we have “The Right It” before we build It right?

As a serial entrepreneur and an early Google employee (where he led the development and launch of Google’s AdWords), Alberto Savoia has experienced great market successes–along with a few inevitable failures. Most entrepreneurs and innovators respond to failure by licking their wounds and moving on to their next idea. But Alberto decided to first deal with the sting of failure by stinging back. Between 2008 and 2011, while still at Google, Alberto became a serious student of failure in new and innovative products. After reading dozens of studies and analyzing hundreds of new products, he was able to identify the main cause for why most new products fail in the market, and developed a set of techniques, which he called Pretotyping, to minimize such failures.

The concept, techniques, tools and metrics of pretotyping were an instant hit within Google; and soon Alberto found himself teaching pretotyping at Stanford University and at many companies, from startups to Fortune 500. His handbook “Pretotype It–Make sure you are building The Right It before you build It right” has been translated in many languages and has become an invaluable guide for thousands of innovators and entrepreneurs world-wide. Alberto’s work on innovation has been recognized with numerous awards, including The Wall Street Journal Innovator Award. Learn more about Alberto on his website and follow him on Twitter @Pretotyping.